No great surprises, but many questions left open by the results of Norway's elections

The Labour Party fails to win power and Erna Solberg wins a second consecutive mandate. The Prime Minister will guide the country with a 4-party coalition consisting of 89 of the Norwegian parliament's 168 seats, while Labour remains the largest party with 49 seats

The stormy winds of the run-up to this year’s parliamentary elections in Norway have now died down: with the vote-count practically concluded, the hopes of the smaller parties – especially the Greens – have fallen, Labour has avoided a heavy defeat, and the conservative coalition is preparing for another four years in power, almost a copy of the composition of its previous mandate. And yet, numerous questions have been left unanswered by these elections, especially regarding the future of Norway’s hydrocarbon sector.

The surprise second mandate

One surprise is that this is the first time in thirty years that a conservative government wins two consecutive elections in Norway. Prime Minister Erna Solberg is thus preparing to guide her country with a coalition of four parties (Conservatives, Progress, Christian Democrats and Liberals), a repeat of the last four years, with 89 out of 169 parliamentary seats. Labour, however, will remain Norway’s most-voted party, with 49 seats (55 in the previous parliament), guiding an opposition coalition with a total of 80 seats. Although suffering greater losses than other parties, Labour succeeded in avoiding the kind of losses predicted by pre-election polls: in the final days especially, the party looked set to fall to the same level as the Conservatives, at roughly 25%, but actually achieved 29%.

The influence of the oil sector

Labour’s defeat would have been difficult to foresee, at least up until the end of last year: previously, opinion polls had been running at over 35%, and peaking at 38%. The key to that likely success for Labour was the precarious state of Norway’s economy at the time: the country had been severely hit by the crisis of the oil sector, losing 47,000 jobs between 2014 and 2016 (of a total population of 5.2 million). However, by early 2017 the slow-down of GDP growth had halted, producing a 0.7% growth-rate in the first quarter and 1.1% in the second. The end of the oil sector’s poor performance, visible in the second quarter, when it grew by 3.7%, confirmed the most rosy previsions for Norway’s future economic growth, for which the conservative party received most of the credit, a fact now translated into today’s electoral success. This success has also been fueled by the controversies surrounding the rise in immigration, a theme which benefitted the Progress party, the anti-immigrant populist ally of the Conservatives.

The other parties

The Green party was perhaps the most disappointed of all: hoping to play a key role in the new parliament, it finished by failing to pass the 4% mark and was thus condemned to remain with only one seat, as in the previous parliament. The battle for the phase-out of the hydrocarbon industry, waged by the Greens, now looks likely to disappear from the agenda... especially given the poor performance by the party’s allies on this subject, the extreme leftwing RED party, and the ex-Labour party breakaway, Socialist Left. Many aspects, actually, remain unpredictable.

The right wing coalition, in particular, is more fragile than it seems. Even back in 2013, the alliance with the Progress party was the subject of criticism from the other two allies, the Christian Democrats and Liberals... this friction has intensified in recent months, especially on the subject of immigration (supported by the former) and on new oil drilling in the Arctic (opposed by the latter, as in the case of the 24th round of concessions). The actual disposition of parliament could, therefore, evolve towards different equilibria from those currently foreseen.

The future of hydrocarbons and the sovereign fund

Labour’s focus on the hydrocarbon sector and, in general, on the diversification of Norway’s economy, reflects the interest of a large part of the electorate in these themes, spreading well beyond the confines of the Green party. While extreme viewpoints such as the phase-out of the entire oil industry over 15 years will certainly not appear in the government’s agenda, it is quite possible that various of the many forces in the parliament will press to limit new concessions, especially in critical parts of the country (such as the Lofoten Islands or the Barents Sea). In general, given the growing attention paid to the subject, current discussion on the future of the Norwegian oil sector may be only the beginning.

And finally, the future remains to be decided concerning the grand absentee of the electoral debates: the management of Norway’s sovereign fund. This consists of roughly a trillion dollars, whose widespread use in recent months (funds were withdrawn to cover one seventh of the national budget in 2016 and 2017) served to soften the impact of the crisis... to the benefit of the conservatives. The sovereign fund is run by the Norwegian National Bank, but many people, including the Re-Define think tank, argue that its running should be less a bureaucratic matter and more a parliamentary one. This issue has not been discussed in recent months.

To sum up, Norway’s election has concluded with an apparent continuation of the previous status quo. However, faced with major changes in the global oil sector, and the political and economic developments within the country, it is perhaps more likely that it will be the political debate that follows this election that defines Norway’s degree of stability in the coming months.